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06/10/2007

Women's Role in the Economy-BECKER

With Hillary Clinton a very serious candidate for the U.S. Presidency, Angela Merkel as Chancellor of Germany, and Segolene Royal who almost became president of France, women have clearly arrived as political leaders in Europe and the United States. More to the point of this essay, the increasing role of women in political life is a reflection of the general education and employment advance of women in many countries.
Consider first education. Men in the United States who were born around 1930 were far more likely than women born at that time to attend college, whereas among those born 40 years later, about 10-15 percent more of the women than men went to college. Over twice as many men as women graduated a four-year college in that earlier cohort, while women in the later cohort were considerably more likely than men to graduate. Put differently, whereas in earlier cohorts women were much more likely to drop out of college, this pattern has sharply reversed, so that male students now are more likely to drop out. As a result of these trends, somewhere between 55 and 60 per cent of all students in American colleges are women.
The same general trends in educational achievements of men and women are found in other countries with advanced economies. Nor is this trend restricted to advanced economies. An article a few weeks ago in the New York Times indicated that female college students far outnumber male students in the moderately poor Moslem country of Algeria, and many more of the judges and lawyers there are female. Even in the fundamentalist country of Iran, women now apparently outnumber men at universities, although shortly after the Iranian revolution in 1979, attempts were made to discourage women from getting a higher education.
The subjects studied by women in high school and college are also converging to those studied by men. According to data presented by Golden, Katz, and Kuziemko (see "the Homecoming of American College Women: The Reversal of the Gender Gap in College", Journal of Economic Perspectives, Fall 2006 for these data, and some of the other data used in my discussion), girls are about as likely as boys to take physics and math courses in American high schools, and girls are more likely to take chemistry courses. Girls have better grades on average at all levels of education, while the dispersion in grades and performance is greater for male students. This means that male students are much more represented at the extremes of the school performance distribution: at very low as well as very high levels of school performance.
The propensity of women to go to college exceeds that of men in part because the financial gains from a college education compared to stopping education after high school have been higher for women than for men. According to calculations by my colleague Kevin M. Murphy, in 1990 college-educated women had average hourly earnings that were about 65 per cent higher than the average hourly earnings of female high school graduates, while the difference for men was only about 58 percent. The financial gains to both men and women from attending college increased by a lot from the mid 1970's on, although after 1990 they increased more for men.
During the past 60 years in all economically advanced nations, and in most developing countries as well, women began to work much more in the economy, and they acquired significantly more schooling, partly because birth rates declined sharply. As a result, women now have considerably more time that is free of household responsibilities. The American and other advanced economies also shifted away from manufacturing and toward services, where women have always been more likely to find employment. Discrimination in admissions to medical, law, engineering, and some other professional schools also declined, perhaps mainly under the pressure of the growing number of women who wanted to enter these programs. About half the students at medical and law schools in the United States are female, and their enrollments in MBA programs and engineering schools are also increasing rapidly.
A larger fraction of employed women are now working full time compared to the situation 50 years ago. For example, about two thirds of women who graduated college in recent years work full time compared to about one third a few decades ago. The greater education and greater commitment to the labor force of women than in the past helped raise the annual earnings of women relative to men. Some estimates indicate that wives earn more than their husbands in over 30 per cent of families where both work, and the fraction of families in which wives are the main breadwinner has been growing at a brisk pace.
Yet, women still on average earn less than men, and women are much less represented in the top deciles of the overall distribution of earnings. The next couple of decades should see a narrowing of both these gaps, but will they be eliminated? If, as is likely, women will continue to take time off from work to care for young children, and to miss work when their children get sick or need other special attention, that would continue to reduce both their average earnings relative to men, and their representation in the top of the earnings distribution.
To be sure, the greater education attainment of women, and their better performance at school, would tend to raise their average hourly earnings above that of men. Their better education and school performance would battle against their household responsibilities in determining the earnings of women relative to men. Still, even if the average hourly earnings of women reached parity or surpassed that of men, it is unlikely even without discrimination against women that they will be as represented as men at the top of the earnings distribution. For while combining household with market activities hurts average earnings, it is a really strong hindrance to having enough time to make that supreme commitment to work that is usually necessary to achieve great financial success.

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